MARKETING SEMINAR FINAL PROJECT

Group #1:

Ronny Perel

Yuda Spitzer

Shlomo lewin

Benny Lubin.

Topic: Insurance & Risk

Management In a

Competitive Market

DEFINITION

Insurance is an agreement where, for a stipulated payment called the premium, one party agrees to pay to the other a defined amount upon the occurrence of a specific loss.

Insurance is a risk management tool

People chose to buy insurance because they are risk averse.

DIFFERENT RISK MANAGEMENT FORMS• Insurance – Buy a policy

• Self Insurance – measures that reduce loss

• Self defense – reduce chance

• Avoidance – Avoid the risk such as driving fewer miles with your car.

• Hedging – Take another risk to offset another risk. For example an Israeli exporter who thinks the shekel currency will strengthen will buy an option on the dollar so he will profit from the increase of the shekel.

• Retention – Do nothing. Like companies that retain their earnings in order to have the option of using their money in the future without facing any present threats.

SEGMENTS OF THE INSURANCE MARKET

Life insurance

Property and casualty insurance

Reinsurance

INSURANCE PROVIDERS

Mutual Insurance: Example- Mutual of Omaha

Stock corporation: Example- AIG,Aon,etc.

INSURANCE PRICING

The pricing of insurance is based

on the probability of the occurrence

of the given event

The probability of occurrence is

expressed in the following equation

Risk pooling

In order to lower the risk an insurance company must be

big. The bigger; the less risk

INSURANCE MARKET CASE STUDY

Problem statement: How does a small insurance

firm remain competitive in a market dominated by

international firms through mergers and

acquisitions.

PROPOSED FEASABLE SOLUTIONS

Solution 1) - Offer specialized

products

Solution 2) Merge

Solution 3) Sell your firm

Solution 4) Offer a higher

standard of service

PROPOSED SOLUTIONS:

Solution 1) - Offer specialized products that are not

offered by the big insurance firms

SWOT: 1- OFFER SPECIALIZED

PRODUCTS

Strength: Offer a product that does not exist by the

big competitors. For example offering personally

priced auto insurance.

Weakness: You don’t have a variety of products.

You got a very narrow range of products. Weaker

financial backbone

Opportunity: Develop specialized products for a

specific region/area of business

Threats: The big companies can overrun you with

special offers since they have deep pockets filled

with cash.

Solution 2) Merge

SWOT: 2- MERGE

Strength: Financial backing of a bigger company.

Wider range of products Wider geographic area.

Weakness: Lose the personal touch. Your name

may be associated with a not so sympathetic

company.

Opportunity: Offer to your current customers the

product that the merged company has in its

arsenal.

Threats: Lose customers due to an unwanted

associate.

Solution 3) Sell your firm

SWOT: 3- SELL YOUR FIRM

Strength: Make a profit by selling your firm for a

high premium

Weakness: Big insurance firms may prefer to do

direct marketing to their costumers and will not buy

your firm just for your clients.

Opportunity: Get out of your sinking boat.

Threats: The big insurance firms can eliminate you

by dropping their prices dramatically driving your

firm to losses. The big firm can hold their breath;

your small firm on the other hand may run out of

cash.

Solution 4) Offer a higher standard of service

SWOT: 4- OFFER A HIGHER

STANDARD OF SERVICE

Strength: People will come for personalized

service since they know that a small broker will

advise them well.

Weakness: costumers may not be attracted to a

small firm since its prices are not competitive

Opportunity: Can attract people who want highly

personal service and have very specific needs that

are not well answered by the big firms

Threats: you are left with no leverage buying

policies from big firms since you have few

costumers and have no bargaining power.

CONCLUSION

Operate a butique specialty firm

Based on the assumption that an owner of an

insurance firm wants to remain in control of his

company and not be swept under the carpet by the

big firms, we chose solution one, which is,

specializing in a specific market niche

THE THREE FIRMS WE USED

FOR EVIDENCE

Maxassur Antwerp, Belgium. Which specializes in

diamond block policies.

NofBituchim Jerusalem, Israel. Offers client tailored

coverage for cases that are usually not covered by

big insurance firms.

AIM Jerusalem, Israel. Offers English speaking

medical services for Anglo’s in Israel.

THANK YOU FOR YOUR PATIENCE AND

ATTENTION